Clover Partners Has Sent Letter to Metro Bancorp's Board, Says Co. Should Explore Strategic Alternatives

On June 13, 2014, Clover Partners LP sent the following letter to the board of directors of Metro Bancorp

: June 13, 2014 Gary L. Nalbandian Douglas S. Gelder James R. Adair John J. Cardello Alan R. Hassman J. Rodney "Rod" Messick Howell C. Mette Michael A. Serluco Samir J. Srouji (the “Board of Directors”) Metro Bancorp, Inc. 3801 Paxton Street Harrisburg, PA 17111 Dear Board of Directors: Initially we would like to commend management for guiding the company through a tumultuous banking environment and resolving the previous regulatory orders issued to the bank. Furthermore, we appreciate the company publicly announcing long term growth goals in terms of loans, deposits and assets. Based on the May 22, 2014 presentation, the company looks to attain 2015 total assets, net loans, and deposits of $3.3 billion, $2.1 billion, and $2.5 billion, respectively. While we believe these goals are attainable, we have grave concerns about the future profitability of the institution as the company works to achieve these growth metrics. As the company continues to increase its branch network we believe non-interest expenses will rise. In our opinion, additional branches coupled with a fiercely competitive lending environment and additional regulatory scrutiny will continue to suppress profitability. We examined Metro's potential profitability metrics for 2015 using the company's stated goals. Based on our analysis, we believe the company's 2015 ROAA, ROTCE, and Efficiency ratio will equal approximately 0.70%, 8.2%, and 74%, respectively. These profitability metrics are well below similarly sized peers in the Northeast and Mid-Atlantic regions. As displayed in the exhibit below, median ROAA, ROTCE, and Efficiency Ratio metrics for peers equal 1.07%, 12.0%, and 60%.